The Stern intervention

Since the early 1990s all economists who modelled the costs of cutting emissions showed that continued growth and climate protection are quite consistent.36 In 2005 Britain's then Chancellor of the Exchequer, Gordon Brown, commissioned Nicholas Stern, previously chief economist at the World Bank, to prepare a report on the economics of climate change that would consider both the costs of reducing emissions and the costs of climate change if emissions were to grow unchecked. The Blair Government was keen to disprove the argument put by the governments of the United States and Australia that ratifying the Kyoto Protocol would be economically 'ruinous'. Stern's report was a signal intervention in the global debate mainly because it put forward officially a powerful economic case for deep cuts, arguing that it will be more costly economically if we do not act. Declaring that the world does not need to choose between averting dangerous climate change and promoting economic growth, the report concluded that the cost of unchecked global warming will amount to 5—20 per cent of global GDP by the middle of the century, whereas the cost of reducing emissions to avoid the worst effects of warming would be around 1 per cent of global GDP by 2050.37 Not only is reducing atmospheric carbon not an obstacle to continued economic growth, it is the only way to ensure it is sustained.38

The Stern report created a sensation around the world. But no matter how robust the economic analysis, it was never going to shift President Bush and Prime Minister Howard from their staunch opposition. The strategy of the Blair Government of undermining the economic case against taking action was based on a naive understanding of the influence of economics and economic growth on the recalcitrance of the US and Australian governments and the fossil fuel lobby. If growth is a fetish then faith in it is only superficially rooted in its ostensible purpose of raising living standards. If it can be shown that, over time, living standards will be higher by reducing greenhouse gas emissions, this destabilises but does not destroy faith in the magical powers attributed to economic growth and the place of the free market in providing it.

If, as I will argue in later chapters, we must transform our consumption behaviour and rethink our attitude to Nature in order to respond to warming, then the Stern report had the unfortunate effect of further entrenching growth fetishism and the legitimacy of the conventional economic approach to climate change. The Blair Government wanted to make economics the solution to the climate change logjam but could not see that, at a deeper level, the economic way of thinking is the problem.

Stern claimed to offer a new ethical framework for thinking about climate change; but, apart from using certain ethical arguments to justify the use of a low discount rate (considered below), he did not step outside of, or even consider, an alternative moral universe. After all, the Stern review begins with the claim that 'human-induced climate change is at its most basic level an externality',39 that is, an effect on a third party not involved in a market transaction. Although it seems natural to orthodox economists, to characterise human-induced climate change as an 'externality' is a highly tendentious claim, for if it is so 'at its most basic level' then global warming cannot be due to our alienation from Nature, the rapacity of the growth machine, over-consumption by the affluent or the failure of governments to rein in powerful corporate interests. It is caused by a glitch in the operation of an otherwise perfect market, one that arises because those who are responsible for greenhouse pollution 'do not face directly, neither via markets nor in other ways, the full consequences of the costs of their actions'. Global warming is not a human failure but a market failure, a technical problem rather than a social or moral one. The solution, then, is to perfect the market.

The debate that followed the publication of the Stern report, which included vigorous attacks on its 'radicalism' from more conservative economists, never questioned Stern's way of framing the problem as 'the greatest market failure the world has ever seen'.40 Even environmentalists welcomed it. The absence of any challenge reflected the total victory of free-market economics over the previous three decades. Even in the 1960s, to characterise climate change as an imperfection of the market would have seemed an odd way of understanding the relationship of human beings with the natural world. The problem is, says Stern, that the climate is 'a public good' and those who refuse to pay up for using it to dump their wastes cannot easily be excluded from access to it. Of course, this implies that the natural and manageable state of affairs is one of private goods, ones that are well defined, privately owned and able to be bought and sold. This claim naturally provokes alarm about the privatisation of the environment but beneath it lies a prior conception in which humans are conceived as radically separated from the world around them and can therefore regard it as a realm that provides goods and services for human benefit. In a later chapter I consider the philosophical transition that led to this type of consciousness; here we should simply note that most economists and the political leaders in their thrall regard it as puzzling even to question this conception. This is just how the world is, isn't it?

Stern's review of the economics of climate change concluded that aiming for 500-550 ppm CO2-e would reduce global GDP by a mere 1 per cent by 2050,41 so that the level of output that would be reached in January 2050 without any policy intervention would not be reached until perhaps May 2050 with intervention. In Nicholas Stern's judgment this level of costs is acceptable. However, he argues strongly against adopting a more ambitious target of 450 ppm because it would increase the costs at least three-fold.42 But three times a tiny cost is still a tiny cost. It is acceptable, according to Stern, to ask people to wait an extra five months for their incomes to double but it is too much to ask them to wait a little more than a year.

In advising the British Government that pursuing a 450 ppm target would be too ambitious because it would be 'very costly'

and difficult43 Stern was backed by Sir David King, the government's chief scientist, whom one would have thought would stick to scientific advice rather than making political judgments about what is 'realistic'.44 The same conclusion has been reached by Australia's Stern, the economist and former ambassador to China Ross Garnaut, who set out the disastrous consequences of warming then urged the government to adopt a 550 ppm CO2-e global target.45 Pursuing a 550 ppm target would shave a little more than 0.1 per cent from annual GNP growth (the same as Stern's estimate) through to 2050, while a 450 ppm target would cost a little more. Yet the implications for the world of a 450 ppm versus a 550 ppm target are enormous. The Garnaut report itself notes that a 550 ppm world would be expected to see the destruction of the Great Barrier Reef and a near-doubling of species extinctions.46 Garnaut carefully weighs up all of the factors and concludes that 'it is worth paying less than an additional 1 per cent of GNP as a premium in order to achieve a 450 result'.47 However, he did not think the rest of the world would make the same judgment and therefore recommended that the Australian Government adopt a 550 target.

Yet when we consider what is at stake this seems unhinged. The Stern report describes the vast increase in damage associated with a 550 ppm target compared to the 450 ppm target. For instance, the number of people at risk from hunger rises from 25 per cent to 60 per cent (tell them that 450 ppm is 'too ambitious'), the risk of ecological collapse of the Amazon rainforest rises from very low to high, and the onset of irreversible melting of the Greenland icesheet goes from quite likely to virtually certain.48 Aiming at 550 ppm is very likely to cause irreversible changes to the global climate so that the question of how much we would be willing to sacrifice to preserve the climate would no longer be one we would need to agonise over.

What is apparent deep within the political judgments of these economists, and one chief scientist, is that economic growth is sacrosanct; even in the face of a catastrophic transformation of the conditions of life on Earth it seems legitimate to quibble over whether we should accept a decline in the economic growth rate of 0.2 per cent rather than 0.1 per cent. This existential calculus leaves one to wonder whether, if the numbers of the economic models had turned out differently so that sharply reducing emissions would significantly damage economic growth, the governments of the world would indeed sacrifice the planet to the supreme god of growth. The depressing fact is that the outcome of the Copenhagen Conference in December 2009 proved that the prophecies of the Sterns, the Kings and the Garnauts turned out to be right—the world is unwilling to make the trade-off.